E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 3867.50, down 31.25
NQ, yesterday’s close: Settled at 13,055.25, down 224.50
Fundamentals: Monday’s strength, as glorious as it was, clearly got a little ahead of itself. U.S. benchmarks struggled to hold gains at key technical levels Tuesday before slipping into settlement. Strength reemerged overnight and all four major indices are pointing higher ahead of the bell. Reopening news certainly weighed on the Work From Home stocks yesterday, everything from Zoom to Amazon. Whereas names like Apple pared half of Monday’s gains, Financials, Energies, and Industrials are all still up about 1% over the last week.
Johnson & Johnson’s single shot vaccine was approved over the weekend and the company announced a deal with Merck yesterday to expand production capacity. Additionally, the state of Texas announced that beginning March 10th, businesses can fully open to 100% capacity and the mask mandate will be lifted. Other states and local governments have also eased restrictions.
After a three-day slide, rates are pointing slightly higher this morning and pose a headwind to this overnight strength. The U.S. 10-year Treasury is up 5.5 basis points to 1.45% and the German 10-year Bund has joined the uptick. This comes after Bloomberg ran a story saying the ECB is comfortable with the recent bond selloff. This comes after data this week showed firm to stronger than expected inflation across the Eurozone. Last night, Australian QoQ GDP for Q4 beat expectations at 3.1% versus 2.5% and this morning most of Europe, other than Germany, had improved Services PMI from the preliminary reads earlier in the month. ECB Executive Members Panetta, De Guindos, Schnabel speak at 7:00 am, 9:00 am, and 1:30 pm CT.
Congress will certainly garner headlines as the Senate works to pass President Biden’s lauded $1.9 trillion spending package, but with a deadline next weekend, it is job data that will steal the show. The first look at February jobs via the private ADP survey is due at 7:15 am CT. The big Nonfarm Payroll report is due Friday and expectations are certainly wide. Officially, analysts expect 180,000 jobs to have been added in February. After three months of disappointing jobs gains, given the steadfast increase in economic activity, there will be a tremendous emphasis on this report. A hot number would reinvigorate rates and likely cap this stock market rally in the near term.
Today, we also look to Services data from the U.S. with final February PMI due at 8:45 am CT and the more closely watched ISM Non-Manufacturing read to follow at 9:00 am CT. Also, 2021 Fed voters Bostic and Evans speak at 11:00 am and noon CT.
Technicals: Early strength is dissipated as the S&P and NQ turn back into the red. Still, although they could not chew through strong levels of major three-star resistance through yesterday, they have done nothing wrong, YET. For the S&P, it tested and held major three-star support at 3858.50-3863.50 three times yesterday and this wave of weakness ahead of the bell is gearing up for a fourth. We will remain Bullish in Bias across all timeframes as long as this level holds. We like to lean on where a market closes, but a decisive break below here intraday will neutralize our near-term outlook. Upon such a break, what we must be most conscious of are Friday’s gap closes. This aligns to bring major three-star support in the S&P at 3804.75-3809.25. Now, the NQ has incurred added weakness this week and is trading much closer to its crucial level of support at 12,911. In fact, we have not had a major three-star support in the NQ until here. Our momentum indicators are our Pivots and continued action below 3382-3884 in the S&P and 13,135-13,178 in the NQ will keep the tape heavy.
Resistance: 3899-3903***, 3912**, 3928-3934.50***
Support: 3858.50-3863.50***, 3843.25-3848.50**, 3833.50*, 3804.75-3809.25***
Resistance: 13,281-13,353***, 13,427-13,468**, 13,583-13,629***
Support: 13,040**, 12,911***, 12,727-12,767****
Crude Oil (April)
Yesterday’s close: Settled at 59.75, down 0.89
Fundamentals: Crude Oil is again rebounding from a big level of technical support as the OPEC+ meeting and EIA inventory data are eyed. Weakness was fairly broad yesterday and although a massive headline build last night by the private API survey added to selling, it arguable helped create a reversal as all sellers had sold. Today’s EIA data will be a difficult one to digest and just as last night’s API data differed drastically from analysts’ expectation, today’s official data could largely do the same with only a muted reaction. Analysts expect -0.928 mb Crude, -2.3 mb Gasoline, and -3.035 mb of Distillates.
Headlines will come out of the JMMC meeting for OPEC+ ahead of tomorrow’s main meeting. Early expectations point to Saudi Arabia bringing back the 1 mbpd they unilaterally cut through February and March with an added 300-500k coming back online from other members. Although Russia has been persistent about adding production, no nation really wants to spoil this Crude Oil rally. Therefore, the announcement will be carefully construed.
Technicals: Price action is in rebound mode after making a new low on the reopen last night. That low of 59.24, hit our second wave of major three-star support at 59.12 and the tape is now back above our momentum indicator at 60.26. This early strength brings a crucial level back in play, previous support, now resistance at 61.50-61.80; price action failed from here early yesterday with a high of only 61.21. The stage is set, can the bulls close back above here and invite added buying, or will a failure bring price action down into a level that we want to buy.
Resistance: 61.50-61.80***, 62.92-63.05**, 63.81**, 65.65***, 66.60***
Support: 59.75-59.82**, 59.12***, 58.60**, 57.31-57.67***
Gold (April) / Silver (March)
Gold, yesterday’s close: Settled at 1733.6, up 10.6
Silver, yesterday’s close: Settled at 26.879, up 0.201
Fundamentals: Gold and Silver had a quick sign of life yesterday and finished the electronic close by grinding ever so slightly higher. Typically, this sign of strength carries into Asian hours and after such a deep selloff, can bring a tailwind of buying for 1-2% in gains overnight. This was not the case as Gold quickly stalled before midnight and this, coupled with a rise in rates overnight, smacked Gold back down to its recent lows. The U.S. Dollar is also gaining ground ahead of the bell and the combination, as we have said before, is not a good one for Gold in the near-term. This combination also comes despite an underwhelming private ADP payroll read. With the marketing working through these gyrations, and today’s ISM Non-Manufacturing due at 9:00 am CT, Friday’s Nonfarm Payroll will be on everyone’s mind as the near-term make or break for Gold at this next crucial level of technical support.
Technicals: Gold is retest rare major four-star support at 1704-1710 and Silver is retesting major three-star support at 25.968-26.15. These are levels that each has responded to multiple times already this week and must do so again. There is no arguing that the trend has been lower over the near-term and we are Neutral given the break below 1767-1770 in Gold, but we do see tremendous value here over the intermediate and long-term. Our momentum indicators align to create first key resistance, and each must move back above there today in order to again neutralize a wave of weakness and set the table for buyers to step in.
Resistance: 1728-1732.9**, 1741.1-1745**, 1757-1759***, 1767.2-1771.2****
Support: 1704-1710****, 1680***
Resistance: 26.44-26.67**, 27.15-27.34***, 27.685-27.77**, 28.13-28.47***
Support: 25.968-26.15***, 24.77-25.00***
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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.